Traditionally, Indians always wanted to own things and renting was considered as wastage of money. This mindset however, has started to take a drastic turn as online rental platforms have started to crop up at a rapid pace. The boom in this industry can be attributed to the fact that in the last three years, around 100 online rental service providers have come up to cater to the varied demands from bikes and cars to books , clothes , and even household commodities such as table lamps and beds. However, on the flip-side of this booming rental economy is the monumental slump that the manufacturing sector is experiencing.
Manufacturing rates slumped to a dismal growth rate of only 0.6 percent in the first quarter of the year 2019 from 3.1 percent during the fourth quarter of the year 2018. Though the rental economy is still much smaller than the manufacturing sector, the shift in traditional habits of owning assets to renting them can be attributed to the average age of India’s population and the migration patterns among the youths to move to tier I cities for better job opportunities.Thousands of such youths are now using online renting and sharing services to hire an array of products – furniture, consumer appliances, vehicles, designer wear, and even art pieces.
The global rental economy was estimated to be around 115 billion USD in the year 2016 out of which India contributed around 10 percent.
According to research estimates by Forrester the Indian online furniture and home-ware rental sector contributed $1.1 billion in revenues in 2017, from $900 million in 2016, growing at about 36 percent. The Indian rental platforms such as Airbnb , taxi aggregators like Ola and Uber, and self driving car rentals such as Zoomcar and Drivezy has redefined the concept of sharing and renting in India. The sharing economy is further triggered by rentals available at cheap affordable price, use of Smartphone applications that enables the customers to rent products at the tip of their fingers from the comforts of their homes.
Every day the world is edging closer to a global recession and the situation in India is no different. About 2 lakh Indians working in the auto sector have lost their jobs in the past one year alone and the scary part is that the auto sector represents just one sub-category within the manufacturing sector. The circumstances of today’s 25-30 year old are quite different from the 25-30 year olds of the past decade or so. Income levels have decreased significantly as the companies are trying to introduce pay- cuts and even worse- lease out contracts to tackle the ongoing economic crisis. In such a situation of uncertainty, the young working class is unwilling to spend money in buying new assets but rather rent items of their needs. Property and Real estate sectors which are very much depended on the manufacturing industry’s services have also seen a sharp decline in recent times.
With the online rental industry now booming like never before, companies are seizing this opportunity, and have adopted various business and marketing strategies to get ahead of the curve. Satish Meena one of the senior analysts of Forrester Research says “Right marketing strategies are very important, If a customer is using, say, a furniture for more than 12 months, buying will be a better option considering the easy pay options many retailers are offering.” Failed market strategies have cost some startups in the online rental industry dearly. Seeing the possibilities that lays ahead online rental companies are planning for further expansion.
India’s asset acquiring habits nowadays have a new parameter called renting. However, it is unknowingly hurting the manufacturing industry.